Vote due in House of Lords

McDonnell offers ‘get-out’ option on tax credits

John McDonnell 2Shadow chancellor John McDonnell has offered the government a get-out clause if it reverses its plans to cut tax credits.

Mr McDonnell said Labour would not make political capital out of a full u-turn and instead would co-operate in future efforts to review the tax credit bill.

His offer comes ahead of a vote in the House of Lords which may decide to reject the bill.

The measures have been approved on three occasions by the Commons since June but there has been growing unease on the Conservative benches about their impact on poorer sections of society.

Tax credits were introduced by the last Labour government and are made up of a Working Tax Credit for those in work, and a Child Tax Credit for those with children.

Under the latest proposals, WTC payments will be reduced when someone earns £3,850 instead of the current £6,420. The income threshold for those only claiming CTCs will be cut from £16,105 to £12,125.

A so-called “fatal motion” in the Lords is expected to secure cross-party support which would see the proposals sent back to the drawing board.

A second motion will consider a separate motion urging a delay while a package of financial assistance is drafted.

Government ministers say that new measures being introduced, such as the new national living wage, increases in the personal tax allowance and an extension of free childcare, will mean the majority of existing claimants will be better off.



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